Insurance Bad Faith

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People buy insurance in a spirit of trust. They feel assured that the insurance policy will bear the heavy financial responsibility if property is damaged or a family member or friend is seriously hurt. 

But sometimes the insurance company views the situation from a different point of view. We have experience with insurance companies that act in bad faith against their policy holders. Over the years we have helped many people recover full payment from their insurance companies. It’s all about doing what’s right.

We are dedicated to holding profit hungry insurance companies responsible for the promises they make to their clients.  All of us purchase insurance--for our homes, automobiles, health, etc.-and assume that, should we become ill or disabled or suffer serious damage to our property, that insurance coverage will protect us. Unfortunately, that is not always the case. Insurance companies sometimes put profits ahead of fulfilling their obligations to their policyholders. 

In those situations, policyholders have a right to sue the insurance companies for "bad faith," in order to force them to honor their contractual obligations, and, in certain circumstances, to compensate the policyholder for their emotional distress and/or to pay punitive damages.

When an insurance company violates principles or regulations governing insurance law, it may constitute insurance company “bad faith.” Bad faith essentially refers to unfair treatment by an insurer, and can include:

• Discriminating on the basis of race

• Denying a claim

• Wrongful delay of payment or insurance reimbursement

• Stalling in making a decision on an insurance claim

• Requiring unreasonable actions or documentation by an insured.

In addition to the value of the claim itself, an insurance company acting in bad faith in an insurance dispute may also be liable for damages for causing emotional distress to the plaintiff, and perhaps even punitive damages if the conduct or the pattern of conduct is outrageous.

What are "Bad Faith Insurance Claims?"

This term is applied when an insurance company's denial of coverage is wrongful and/or constitutes bad faith. Generally, this reference describes a carrier's contemptuous conduct and unscrupulous greed in their effort to avoid paying a policyholder's just claim.  Insurance policies are confusing, ambiguous and filled with loopholes by design - not just coincidence. Comprehensive interpretation is difficult for trained professionals and rare for laypersons.

It 's also not unusual for insurers to offer promotional materials to help sell the policy that contain representations contrary to the policy that is actually issued. Prudent saving of any informational brochures and sales aids could prove valuable for future claims disputes.  Benefits discrepancies between offers and actual delivered underwritten policies are particularly widespread with regard to umbrella coverage.

One very well known carrier publicly advertised that its umbrella policy will protect the insured from suits relating to: 

false arrest, false imprisonment, wrongful eviction wrongful detention, malicious prosecution humiliation; libel, slander, defamation of character or invasion of rights of privacy; and assault and battery.

However, if a claim is actually filed for one of these, the insurance company may assert that Insurance Code -- which states that an insurer is not liable for the willful act of the insured -- precludes coverage for intentional torts. Such conduct approaches actionable bait-and-switch sales tactics. The consequences of misrepresenting policy coverage in promotional material range from fraud-based punitive damages to bad faith liability.

By law, these discrepancies must be interpreted in favor of the policyholder. If any clause in the insurance contract was unconscionable at the time it was drafted, the court may refuse to enforce the contract or the offending stipulations. The insurer is responsible for meeting the objectively reasonable expectations of the insured and coverage must be provided accordingly.

Virtually every bad faith case reported over the past 20 years discusses the "peace of mind" motivation in purchasing insurance. This is a key motivation for the purchase of indemnity products.  Although the law requires an insurance company to consider the interests of the insured at least as much as its own, if there is any excuse for an insurance company to deny or limit coverage of a large claim, it probably will try to do so. Insurance companies are masters of claims negotiation. 

If you feel you have been wronged by an insurance company, please contact us today.